Alphabet : Google Faces EU Antitrust Fine -- WSJ

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06/17/2017 | 08:48am CEST

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By Natalia Drozdiak

BRUSSELS -- European Union regulators in the coming weeks are set to hit Alphabet Inc.'s Google with a record fine for manipulating its search results to favor its own comparison-shopping service, according to people familiar with the matter.

The antitrust penalty against Google is expected to top the EU's previous record fine levied on a company for allegedly abusing its market position: EUR1.06 billion (about $1.2 billion) against Intel Corp. in 2009.

Under EU rules, the fine could reach as high as 10% of the company's annual revenue, which was $90.27 billion last year.

Google faces additional, and perhaps more painful, consequences from the European Commission's action, including possible changes not only to its handling of its shopping service but other services as well. The antitrust watchdog's decision could also embolden private litigants to seek compensation for damages at national courts.

The EU is likely to instruct Google to put its comparison shopping service on equal footing with those of its competitors, such as Foundem.co.uk and Kelkoo.com Ltd. Such companies rely on traffic coming to their site from search engines like Google's, and the equal-treatment requirement could lead to greater visibility for rival services on the tech giant's platform.

The EU has been in talks with some of the complainants about how Google should change its search results, though the precise remedy would likely be hammered out only after a decision is announced.

Google general counsel Kent Walker has previously argued that forcing the company to place competitors' product ads in its search results "would just subsidize sites that have become less useful for consumers."

The regulator's move would come as welcome relief to a range of web companies -- large and small, European and American -- that have been urging the EU for years to take antitrust action against Google. News Corp, owner of The Wall Street Journal, has formally complained to the EU about Google's handling of news articles on its search service.

The EU watchdog opened its investigation into Google's practices in 2010. The former competition commissioner, Joaquín Almunia, subsequently drafted various settlements with Google over more than two years of talks, but the steps offered by Google were rejected in 2014 following criticism from competitors, as well as from politicians in Germany and France.

That led the way for Mr. Almunia's successor, current EU antitrust chief Margrethe Vestager, to file formal accusations against Google -- the first regulator in the world to do so -- by issuing a so-called statement of objections in the comparison shopping case in April 2015.

An EU decision against Google would set the regulator apart from authorities in the U.S.; they closed their own investigation into Google's search practices in 2013 after the company agreed to voluntary changes. The divergence could reflect in part Google's greater presence in search on the continent, where it holds about 90% of the market.

Google can appeal any decision by the European Commission in the shopping case to the bloc's top courts in Luxembourg, dragging out the legal battle as a final ruling could take years.

A decision in the case could set precedents for how the U.S. technology company operates in other domains, including with its local and travel services -- areas the EU has also been investigating. Meanwhile, EU antitrust cases against Google over its Android mobile-operating service and its advertising service Adsense remain open.